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spk08: Ladies and gentlemen, we will be getting started shortly. Please stay on the line. We will be getting started shortly. Thank you. Thank you. Good day, ladies and gentlemen, and welcome to the Orogenesis second quarter 2021 business update call. All lines have been placed on a listen-only mode, and the floor will be open for your questions and comments following the presentation. If you should require assistance throughout the conference, please press star zero on your telephone keypad to reach a live operator. At this time, it is my pleasure to turn the floor over to your host, David Waldman, Investor Relations. Sir, the floor is yours. Please stand by for David Waldman. Okay, David, you're on the air. I'm sorry about that.
spk09: Yep. Can everybody hear me? Yes. Great. All right. Thank you, and good morning, everyone, and welcome to our Genesis second quarter 2021 business update conference call. On the call with us this morning are Varad Kaplan, Chief Executive Officer, and Neil Reitinger, Chief Financial Officer. about the company, please contact Crescendo Communications at 212-671-1020. The conference call contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities and Exchange Act of 1934 as amended. These forward-looking statements involve substantial uncertainties and risks and are based upon our current expectations, estimates, and projections, and reflects our beliefs and assumptions based upon information available to us at the date of this conference call. We caution listeners that forward-looking statements are predictions based on our current expectations about future events. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and assumptions that are difficult to predict. Our actual results, performance, or achievements could differ materially from those expressed or implied by the forward-looking statement as a result of a number of factors, including but not limited to the risks and uncertainties discussed under the heading Risk Factors in Item 1A of our annual report on Form 10-K for the fiscal year ended December 31, 2020, and in other filings with the Securities and Exchange Commission. We undertake no obligation to revise or update any forward-looking statement for any reason. I'd now like to turn the call over to Orogenesis' CEO, Ms. Varad Kaplan. Please go ahead, Varad.
spk00: Thank you, David, and thanks for taking care of the technical problems, and thanks to everyone for joining us on our call today. I'm pleased to report we've achieved over a six-fold increase in revenue from the second quarter of 2021 compared to the second quarter of 2020. We believe this reflects both the progress and the sustainability of our point-of-care strategy, and I'll talk more about this in a moment. But let me first take a minute to discuss and remind you all about our point-of-care strategy, which we believe is the key to unlocking the full potential of the cell and gene therapy industry. As I've stated in the past, our business is built around three key pillars, our point-of-care therapeutics, our point-of-care technologies, and our point-of-care network. Each of these components aligns the interests of the therapy developers, the hospitals, the patients, and the companies in a way we believe has not been done before. We are rapidly gaining traction with our point-of-care platform by adding new point-of-care therapies and technologies, as well as expanding our global network through collaborations with research centers, hospitals, and biotech companies around the world. Currently, most cell and gene therapies are manufactured using a centralized production, either through in-house production or through the services of CDMOs, contract manufacturers, which is standard across the biotech industry. Centralized production has its limits. It requires massive capital investments. It is very expensive to operate and can take years to bring production online at meaningful scales. At the same time, with the explosive growth of the cell and gene therapy market, the industry faces major bottlenecks and capacity shortages at the CDMOs, internal manufacturing, and logistic problems, reflecting the cost and manufacturing delays of these therapies. Neither of these options, either internal or using a centralized CDMO, are cost-effective or sustainable as the industry continues to grow. A good example of this is the CAR-T therapies, which have faced supply chain issues and can range in cost in the hundreds of thousands of dollars per patient with rising resistance from payers. As both clinicians and patients grow more aware of these new treatment modalities, demand grows, but the industry lacks the capability to ramp up to meet demand. Some biotech companies are trying to build up internal capacity to meet growing demands, but this is a lengthy process. Even if the required manufacturing know-how is in place, setting up GMP facilities based on clean rooms, training new employees, and putting in place the required quality systems are extremely lengthy processes. It may take years. Some hospitals are trying to solve the supply and cost issues by manufacturing their therapies in-house. This is also far from simple. Hospitals are set up for treatment of patients and in some cases for research, but GMP manufacturing is typically a biotech soul. Most hospitals lack the required infrastructure, not only the clean rooms, but the entire quality assurance and supply network required for complex drug production. Innovation is springing up all around and trying to solve these problems. Many engineering companies are trying to develop closed automated systems that will allow simplified manufacturing of these therapies. This is a great step forward, and we as a company collaborate with many of these innovators, integrating their innovation into our platform. But having the proper equipment to manufacture on-site is just one piece of a much more complex puzzle. In order to enable decentralized supply of cell and gene therapies, Much more is required. The key factor is standardization, so that no matter at which site the product is produced, it's exactly the same process. To enable such standardization, several factors are required, and these factors are the foundations of the Regenesis point-of-care platform. A harmonized quality system, well-established training protocols, audited and consistent suppliers and vendors of materials involved in the production, and consistent quality control, validated automated solutions that minimize human error, and closed units to control infections. No less important is also a consistent manufacturing environment. One of the reasons we like to use our arm pools, our mobile units, this ensures we are always duplicating the exact same environment no matter where we manufacture. We believe our strategy of decentralized supply of cell and gene therapies based on standardization of the manufacturing environment, will ultimately become the solution for this industry, enabling lower cost, accelerated development, and ultimately provide a scalable long-term option to overcome the industry-wide capacity constraints. And while the rollout of our decentralized point-of-care strategies in the early stages, once the foundations are well established, it is much quicker and lower cost to expand capacity and increase rollout. Once we have validated a production process in one arm pool at one point of care location, we can add additional arm pools under the same quality system and infrastructure. We continue to strengthen the foundations of our point of care network via new joint ventures, partnerships with leading hospitals and research institutes across North America, Europe, Asia, and the Middle East, and are investing our efforts in validating our point of care platform within each region. Most recently, I'm pleased to report we entered into an agreement with a local partner to expand our point-of-care network in Australia. We are also seeing growing government interest in our JV partners and have identified a number of potential opportunities for government grants and other supports. Each of our partners have aligned interest with our own and have committed to support the validation, development, and clinical trials of advanced therapies utilizing our point-of-care platform. within their respective markets. As we have discussed in the past, we grant our partners geographic supply rights in exchange for future royalties and revenue-share agreements. World Biogenesis provides ongoing support for the operations and deployment of the target therapies. We believe this approach is highly scalable as it de-risks development through outside support from our partners. If you look at our revenue growth for the quarter, this reflects the first phase of our validation stage, of our rollout. Specifically, we are providing our partners and the hospitals we work with directly with technical, regulatory, and clinical support to establish our operations under long-term contracts. As we move into commercialization phase within respective point-of-care centers and potentially launch new therapies, we expect to benefit from revenue sharing and royalty agreements. Once in the commercial phase, we expect that our partners will be in a position to add additional sites and ramp up capacity very quickly to meet the needs of customers in their territories. Another example of the growth in our point-of-care network is in the U.S., where in most cases we work directly with the centers and are expanding our collaboration with a number of leading global healthcare institutes, such as Johns Hopkins University, where we are establishing a point-of-care development center, similar collaboration with UC Davis in California. We could not be more excited about these partnerships and the support we have received from both JHU and UC Davis. We have added additional validation sites across the US. In fact, we recently began setting up an additional center in the Boston area, which will help expand our presence in the Northeast and expand our capacity. Together with our partners, we now have a number of sites across Europe and other territories around the world including Italy, Spain, the Netherlands, Greece, and more. Our most recent addition was the Premier Center in Lithuania. Clearly, our business model is taking hold, and we are doing our utmost to provide all the support each point-of-care region requires. Our goal at the moment is not to add on as many sites as possible, but rather choose the optimal sites for validation of our point-of-care platform. Once we have received the required approvals, we believe we can quickly expand capacity with the support of our JV partners. Also, keep in mind, we and our partners sold MasterCell not long ago for approximately $300 million, when our revenues of MasterCell were roughly $30 million. And although MasterCell was a cutting-edge CDMO, we still faced the same industry challenges as other CDMOs, utilizing a centralized approach. In contrast, our annualized revenues based on our initial partnering programs are already nearing master sales at the point we sold it, reflecting the quick capacity buildup that the decentralized point-of-care approach enables and the foundations we are solidly building up for future ramp-up. Turning now for a moment to our point-of-care technologies. We have been very active, adding a number of highly advanced automated technologies into our platform. As an example, we have commenced enrollment for a Phase II clinical trial using the tissue genesis isolator at the Hospital of Special Surgery in New York. The tissue genesis isolator is designed for the use of point-of-care and is a practical and cost-effective solution for clinical applications of stomal and vascular cells from autologous adipose or fat tissue. We are also advancing our point-of-care therapies, which now span immune oncology, antiviral therapies, metabolic autoimmune diseases, tissue regeneration, and more. Our strategy involves in-licensing therapies from leading research centers, hospitals, and biotech companies, taking on the responsibility of industrializing and supplying these cell and gene therapies in a consistent and standardized manner in all locations. Orgenesis research and development teams have been working closely with our global partners in academia and industry partners, collaboratively progressing towards the goal of enabling the research discoveries to become clinical-grade therapeutics. At the heart of our business model is our goal to make these therapies available to a large number of patients at reduced cost. So on-site processing of our therapies using the point-of-care model. which we believe will support payer uptake. Unlike a traditional biotech with a handful of therapies in the pipeline, we continue to evaluate new therapies at all stages of development through our growing partnership with researchers, commercial entities, and hospitals. We have built a robust therapeutic pipeline, which includes more than 30 advanced cell and potential gene therapies, and we continue to evaluate new therapies every day. More recently, in June 2021, we achieved the multiple Ampirinaz development milestones based on the Ogenesis acquisition of the Tamir biotechnology assets last year. Ogenesis has completed its pre-IND cancellation with the U.S. FDA regarding the development of Orantoc, a topical gel formulation for Ampirinaz for the treatment of anogenital warts. We are on track to start phase 2 trials in this indication after completing the FDA pre-IND request. We have recently announced that our licensing partner, Ocogen, presented positive interim phase 2 clinical design results for OKG0301, an ocular formulation of RAN-Pirinaz in acute adenoviral congenitivitis. This research provides encouraging scientific validation for continued development of RAN-Pirinaz in ophthalmotic indications. Ocrogen plans to progress to a Phase III trial and has presented its plans to the FDA. Regarding our collaboration with LADIS, we are preparing additional materials that we believe to lead to an IMD submission for a clinical trial for Rampirinaz for the systematic treatments of patients infected with COVID-19. We are also planning to test Rampirinaz against other potential target infections, which are high on the U.S. National Institute of Allergy and Infectious Diseases emerging infectious and pathogens list, including Ebola and eastern equine encephalitis virus. Lastly, we have begun feasibility studies to combine Ranpirinase with eugenesis bioxome technology. Bioxomes are extracellular vesicles that we believe can provide some therapeutic benefit of cells without the difficulty of administering the entire cell to the patient. This reformulation of Ranpirinase may enhance delivery of the antiviral activity of Ramparinaz without increasing the risk to the patient. This is just one example of what we're planning to leverage our bioxome technology across our platform. In addition to the therapeutic programs I mentioned, we're also engaging in numerous additional collaborations to advance our pipeline, including collaborations around the development of new manufacturing methods for tumor-infiltrating lymphocytes and CAR-T and NK-based therapies. In addition to our technical and manufacturing expertise, we also provide our therapeutic development partners with extensive support for quality assurance, regulatory and clinical development, utilizing our internal expertise with the aim of accelerating the development and commercialization pathway. So to wrap up, I remain as encouraged as ever by the outlook for the business and believe we are building a sustainable revenue model that will allow us to support our global partners while they're advance our products through the required regulatory steps. We have invested to expand our capabilities and recruited some of the top industry experts to help us capitalize on this unique opportunity to potentially transform the cell and gene therapy market. We all share a combined vision of bringing breakthrough therapies to market in a cost-effective way that will ultimately benefit patients and save lives. I truly believe our revenue growth, coupled with our solid balance, And the fact that most of our heavy investments are behind us all bode extremely well for the future. On that note, I'll now turn the call over to Neil Isengard, Chief Financial Officer.
spk02: Thank you, Gerard. Our revenues for the three months ended June 30th, 2021 were $10.5 million compared to $1.7 million for the three months ended June 30th, 2020. The increase in our revenue is attributable to technology transfer, setup, scale-up, and validation of our therapeutic pipeline and point-of-care systems for clinical use through long-term contracts and our regional partners. Cost of services and other research and development expenses for the three months ended June 30, 2021 were $9.7 million compared to $25 million for the three months ended June 30, 2020, representing a decrease of 61%. The net decrease during the quarter is mainly attributable to the purchase of the assets of Tamir Biotechnology in 2020. Salaries and related expenses increased by $1.3 million during the quarter. As we have expanded our internal capabilities, including recruitment of leading industry experts to continue the development of our cell and gene therapy product pipeline as we expand our POC operations globally. At the same time, we experienced an increase in professional fees and consulting services of $3.3 million. We continue to invest in the development of automated processing units and processes, as well as owned and licensed advanced therapies to enable commercial production, while working with our partners to address their PO care needs. Selling general and administrative expenses for the three months ended June 30, 2021, were $2.9 million compared to $3.6 million for the three months ended June 30, 2020. representing a decrease of 20%. The decrease in selling general administrative expenses primarily attributed to a decrease in accounting and legal fees as a result of decreased corporate investment activities in 2021 compared to 2020. In terms of liquidity, we ended the second quarter of 2021 with cash and cash equivalents of approximately $28.4 million. We continue to maintain strong balance sheet with sufficient capital to fund development of our PO care strategy. Operator, we'll now open the call to questions. Thank you.
spk08: Thank you. If you have a question, please press star 1 on your telephone keypad at this time. If at any time your question has been answered, you can remove yourself from the queue by pressing 1. Again, ladies and gentlemen, if you have a question or comment, please press star 1 on your cell phone keypad at this time. And our first question is from Bruce Jackson. Please go ahead, Bruce.
spk06: Good morning, and thank you for taking my questions. If we could take a look at the revenue number in a little bit more detail. So you mentioned tech transfer, scale-up, set-up, validation. Could you give us a little bit more of the composition of that revenue number? Is it primarily related to the JV partners, or is there anything else in there?
spk00: Well, yes, because remember, most of our therapies are being deployed through our JV partners in clinical trials, right? So the first step before you start manufacturing a product, and this was the same type of revenue we saw in MasterCell and the centralized services we used to give. You have this initial step where you're doing actually the tech transfer and you're preparing everything in the environment so you can begin manufacturing. It's actually... This initial step, sometimes you do validation runs, sometimes you do quality control validation, all kinds of steps required in order to validate the manufacturing process before you begin your clinical work. So this is very standard in the industry. And of course, when we charge our partners, we charge it with an overhead. but we really want them to get to the clinical stage. But they are paying us, and this is why we believe this is a sustainable model, because as they begin the clinical work, the manufacturing they need, they need our constant support on these services, just as we gave the support before to our customers or biotech companies when we were working through our centralized CDMO structure. I hope that kind of answers the question.
spk06: Yes, it does. That clarifies things. And then if I could ask a follow-up question on the mobile processing units. I'm just curious to know how the rollout of those units is going, and do you have anything operational yet?
spk00: Yes. So we haven't actually made any public kind of disclosures about the entire rollout and the numbers, but I think we're very much on plan, as we discussed, And I think we'll get at least most of the systems out and working. What's important for us is the rollout itself, like sending a system is quite simple, right? You ship it out and it's positioned. I think what we're trying to achieve here is a validation of manufacturing in the systems and making sure we're aligned with all the regulatory requirements around that. And for that, I think we're doing good progress. We're getting good feedback from regulatory and from other, you know, government approvals needed. So I think there's really an understanding, both regulatory and economically and from the different governments and healthcare institutes, that this is actually a good way to manufacture. This is no, you don't, have to give up let's say quality or safety maybe the opposite when you are working with such mobile units okay that's um that's helpful and then um last question i'll hop back in queue
spk06: So the revenue has been growing quite nicely here. To the extent that you can provide some guidance on where the next couple of quarters might fall, would you anticipate that revenue continues to run at this level, or could it be somewhat variable?
spk00: So, you know, the viability, these are long-term contacts we have with our partners, right? Typically until the first stage of clinical and then they continue for support and there's numerous therapies for each partner. So we kind of more or less know that this is the level of revenue that is sustainable for us as a business and make sure that we're sustainable as we continue giving support. because we want to make sure that even during validation stage for each partner, we are not financially, you know, at risk here. And so we kind of more or less know that this is expected revenue per quarter, and the real ramp-up will begin, or we believe it will begin, once they start the clinical work, once they start receiving revenue from the hospitals or different payers. And as this goes and expands, and today the ratio is much more on the validation side, but as they get more presence in each region, that moves more and more to payment on their side, and then we are getting additionally to the service payments we get and the support we're giving them. We also get the royalty payments and additional payments we have in our agreements with them. So I think for the, you know, again, we don't give any guidance on it, but if you look typically at this industry, these type of contracts, the continuous for the next year, usually the first tech transfer phase is anywhere between six months to 24 months, depending on the therapy, the complexity. And as I've explained before, our goal now is not to really, you know, charge our partners as much as possible, but really we take a continuous overhead over our costs to make sure we are sustainable as a business.
spk06: All right. That's helpful. Thank you very much.
spk08: Okay. Our next question is from Kevin Seto. Please go ahead.
spk05: Hi, Verit and Niel. We have been following the progress of Orgenesis and I continue to be a strong supporter of what you do. I think early on in your remarks, you made a good point. When we sold MasterCell, it was earning about $33 million in revenue and it was sold for $315 million to Catalan. So it really shows that the on-peel strategy is ramping up. So I think in our previous earnings call, we've discussed about KyloCell. So currently we are looking to perform automation and seeking additional approvals for this product. So could you share with us more updates in terms of the business plan and the growth of this business in the next two to three years?
spk00: So as I said, and I remember this question, and thanks for bringing it up again, we're very committed to KyloCell, and we can see there's a lot of interest from other regions around the world in introducing it. But again, KyloSol is just the exact example of the challenges this industry faces. It's a great product. It's approved for market, and yet it's very limited in its capacity. So we are still working on the automation and the, I'll call it, ampullization of this therapy. And as I said, I think this is not a trivial process, but I think we are making steps forward. And in parallel, we're also working on understanding the clinical regulatory requirements for other regions. So we're working in parallel. So as we continue to automate and ampulize and validate that, which is very important, we are also expanding the market for this. So we believe there will be a synchronization between the ampulization and the automation and the ability to regulatory-wise expand to additional markets.
spk05: All right, thank you. I have a follow-up question for Nell. So compared to quarter one 2021, using the cost of services alone, I came out with a rough number of the gross profit margin of roughly 34%. In quarter two, similarly, using our cost of services alone, our gross profit margin is 7.8%. So could you share with us what are some factors leading to this change in gross profit margin and were there any one-off costs or is this just a ramp up in expenses in anticipation of future revenues? Thank you.
spk02: I didn't hear your second figure.
spk05: What was your second figure for gross profit? 7.8% in gross profit margin. I'm using the cost of services alone.
spk00: You came to a gross profit of 74%, you said? 7.8%.
spk01: 7.8, yeah. I don't know where you might get that number.
spk00: Neil, why don't you let me answer that, and I'll give a bit of explanation, and then you can go into the financial thing. You know, I'm not sure which formula you use to kind of – because we don't have really – because this is a kind of R&D development, and remember, even though our partners are selling these products, and are pushing them into the market, we still benefit greatly from royalties and other things. We still have an ownership stake in these royalties. So the way accounting-wise it works is that actually it's not considered as COGS. It's not considered as cost of goods, the work we put in. It's actually considered cost of services and R&D. So when you look at our financials, and Neil can explain that more, it's difficult to differentiate what is R&D investments that we're doing internally and what are our, I would say, so to speak, cogs, even though you can't call them that, or what are our cost of services. I can tell you that in terms of cost of services, for us it's quite simple because we take a clear overhead. So our Our gross profit, so to speak, has not really changed. What may have changed, we may have invested a little bit more in R&D. Maybe we've finished some R&D work or finished paying suppliers for work that's ongoing. So I'm not sure these numbers you have really reflect our kind of gross profit. Neil, do you maybe want to add to that?
spk02: Yeah, correct. There's no real thing as gross profit in our business. It's not like, you know, building a car. It leaves the production line and obviously it's done and you can see it's a contained unit. This is a very complex process by which we provide services, by which we develop and also see the result of those because some of these benefit us as well, like research and development. That may be a benefit to a partner or to a customer, quote-unquote customer JV partner, but it also benefits us. So this becomes more of a collaboration with those costs as well that we recognize as our own expense as well as the benefit to that JV partnership, right? So, yeah, there are labor, there's services, there's lab costs and so on that could be seen. you quantify those into identifiable amount. But our business doesn't operate by way of a gross profit amount where you literally see that as a line-up. It's really a matter of the collective revenue and what it takes to drive that and also make us successful along with them and benefiting from each of those, especially that R&D, is not based on a gross profit model in terms of how costs are accounted for. So that's not just for genesis. In the cell and gene therapy world, that becomes more of a holistic type of measurement in terms of what costs are because it's a complicated delivery of a service and an end result.
spk00: And let me give me, maybe I'll give an example to make sure this is clear. Let's say we've licensed a specific CAR T from a specific hospital, okay? Let's say we've just licensed a CAR T for pancreatic cancer, and we've brought it in. Now, we have a stage when we're not yet licensing it out to our partners, and we're not getting revenue from it from our partners slash distributors, okay? So we're still working on that product in-house, preparing it for the next stage when we start licensing it out. So let's say this quarter we've been doing a lot of work on new products that we've licensed in, okay? But we're not yet ready for licensing out and receiving payments on. But they still become part of our R&D and cost and services. So you could say, not in an accounting manner, that we are investing in our pipeline because once we in-license the therapy, that becomes revenue generating for us once we license it out to our partners' distributors because then they need our support to manufacture it and to prepare it for manufacture and to make it available in their area. So this is why you will see maybe a difference. So I think this quarter we had a bunch of new therapies that are almost ready for out-licensing, and I think next quarter we have some of that. But these therapies, we believe, and we know this because we actually ask our partners if they're interested in licensing, that these will soon become revenue-generating assets for us. I hope that explains kind of a bit more, but if not, Let me know, and I'll try to add more detail.
spk05: Thanks so much, Farid and Nell. I think the clarification was really good. I think it removes a lot of confusion. I'm really proud of the progress, and I'll look forward to the next quarter, so I'll jump back to the line. Thank you.
spk00: Thank you. Thank you. Thank you, Farid.
spk08: Our next question is from Megan Han. Please go ahead.
spk07: Hey, Farrah and Neil. Congratulations on your amazing Quarter 2 results and, of course, all your other achievements in the past quarter. I'm really glad to be able to speak with you today. So, in July, I believe you put out some interesting news about your Rantop topical gel, and there seems to be quite a number of users for it. So could you share with us, should this product become commercial, does it have a material impact on your business, for example, the unit economics or some range of margins?
spk00: So I think that, you know, it'll take time because it has to go through full regulatory approval. I think it's, you know, as we develop this product, part of the reason we're very interested in this product active kind of product was because we wanted to combine it with some of our cellular products. I think one of the things that happens, because we work with so many different cellular therapies, we also have developed a lot of technologies that are based on cells. Cells can be used as a whole product, but they can also be utilized and to be made delivery systems. Our Bioxom technology is an example for that. That's an industrialized way to actually make a delivery vehicle from cells, which what we've seen so far in preclinical work is that we are able to utilize this to get drugs that are active in themselves in a better way to the desired location in a much more efficient manner. So this we've seen in preclinical work, and we're hoping to see this also in clinical work. But it doesn't mean that the active molecules in themselves are not efficient. Now, at the moment, this clinical trial is focused on the Lantop, the one that is planned to be made as a product that is to be used for an indication. There's really not a lot of products, good products out there. And we believe that once it gets approved, it will be a superior product to other products. But we also believe this holds a lot of potential to be utilized together with our delivery systems. So there's kind of a double impact here on the company.
spk07: All right. Thank you so much. So it also seems like you're also opening up multiple conversations with the US FDA. Do you still see such conversations being pushed back due to COVID-19 or is the FDA becoming more responsive these days?
spk00: I personally have not noticed a change in the responsiveness. I think they're always very responsive and continue to be so. I think they're especially, you know, responsive to patients that are afflicted by COVID or other indications. But, you know, the fact of COVID doesn't mean there isn't cancer. And I think they're really trying to do a good job and just making sure that all patients and all therapies and companies get the response they need.
spk07: Alright, that's really great. I just have one last question. So while we are not short-term in our investment, we realize that there are really a lot of corporate developments which increase the intrinsic value of genesis, but yet the market is not recognizing it. In fact, I believe your revenue now is quite close to the revenue of MasterCell. So from your perspective, do you have any views on this disconnect or any thoughts on this topic?
spk00: You know, it's a question, you know, of course I asked myself and I asked experts in the market about this. Why does, you know, how the stock price does not reflect what goes on, you know, as we develop quickly. I don't know. I think it's really a matter of things need to catch up. I mean, I think we're working in a sophisticated industry. I think it takes time for people to realize how quickly this industry is growing. And I think it takes time for people to realize what an impact we can have on this industry. And I remember, and I don't know how long you've been following your genesis, but if you may remember, master sales revenue was doubling every year quite consistently. And still, only when we sold the company for the valuation we did, I think the market realized this. So I think because it's a new industry, most of the products have only been approved in the last two years. It takes time for people to understand that. There's hundreds and maybe even thousands of great therapies in the clinical stage now. Many of them are starting to get approved. I don't think people understand what a huge problem actually capacity is, what a tremendous lack of capacity there is in this industry to actually supply these drugs, whether centralized or decentralized. We believe that the decentralized not only allows you to build-up capacity, but it allows you, once you've validated it, to ramp up very quickly. And that's what I think is so important in what we're doing. Because, okay, you can build clean rooms or you can build ampoules, but the difference between adding another ampoule to an existing one Compared to the difference of building another GMP facility is huge. So we really think that the issue is building a way, building a platform, and this is why we're so invested in this, that can quickly ramp up. You can quickly, in three, four months, you can add another arm pure. You can add more sites. So this is what will allow these therapies actually to get to markets. Now, if you're inside the industry and you're a therapy developer or a biotech company or a hospital, it is completely obvious to you this problem, this lack of capacity. But if you're a financial analyst and this is a new industry or if you're just a shareholder or somebody out there that is not involved in the industry, it's a bit more difficult to understand what a huge problem is and how this personalized, genetically modified therapies are really taking a huge space in biotech, how they're going from indication to indication, more and more cancers. And, you know, some people think the problem will be solved by making shelf products. But the whole beauty of these therapies is that they are personalized, and that's what makes them so therapeutic and have such great clinical effect on patients. So even though maybe some shelf products will be produced most of this industry is still, and will probably be in the future, mostly personalized. Maybe even only half the drugs will be personalized, but still it's a tremendous amount of product getting out there to market, getting market acceptance, and having no way to manufacture it. So I think once there's kind of a general, more public understanding that this is the new wave of biotech, that this is the way biotech is going, personalized genetic capability to use your own cells to make the proteins you make, to treat the ailments you have, and they will understand that the biggest issue here is not the clinical or the scientific step, because a lot of work is being done, but actually to provide a way for these products to get to access to market, then they will realize the value we have in terms of just financial value and, of course, what I believe is valuable you know, to people and patients all over the world.
spk07: Thank you so much for your thoughts, Verit. I really agree with you on those points. And I'm also looking forward to what our genesis has to offer in the coming months, in the coming years. And I really appreciate all that you and your team are doing to make cell and gene therapy accessible to all. Thank you.
spk00: Thank you. Thank you for your questions.
spk08: Our next question comes from Ulrich C. Please go ahead.
spk04: Hi, congratulations for the good results. Yes, I fully agree with you that what you are doing is not fully recognized by the market, especially when you have, in my opinion, the that you have done that's very good product in terms of scalability. However, we do not see much publicity on the implementation of OMPUSE. Would you be able to share with us the adoption or the implementation of OMPUSE up to date and also how are you planning to make the public more aware of what you are doing with OMPUSE?
spk00: So look, we haven't Given any public kind of information, I will and I can tell you that our goal, and we have showed this, for this period, we believe the 35 centers really kind of map out the regional kind of areas we want to cover. These are validation centers. And as I explained before, our goal now is not to ship out as many ampoules as possible. Our goal is really to find the best hospitals as reference of excellence, right? To validate the manufacturing in these ampoules, and that does not mean getting clinical approval for a drug. It means being able to manufacture, as I said, in a standardized manner in all of these sites in a mobile unit or in some of the mobile equipment we use, okay? And to show we can generate the same product in all these sites, because 35 sites really covers quite a, covers the globe more or less. I mean, you know, we're just looking for, we're kind of setting up and looking for the best therapies to implement in Australia, okay, for instance. So we're really trying to make this a global distribution kind of availability. And Because there's such a big need and because there's such a lack of capacity, we continuously get requests. So even though we decided on 35 validation centers, we may go up a bit because if there's a great research center that wants to get involved now, I don't want to say no to it because we can already get rolling there. But that's our goal. Because once we validate, once we really make sure one center is working properly in that legal regulatory region, then it's much easier to quickly ramp out and expand to as many centers or as many ampules as needed. So that's why I don't think, you know, a lot of time people ask me, well, how many have you gotten out? That's not the issue. I think we've covered the ground we want to, and now we really have to focus on validation. And I think our model of being kind of sustained and paid for all the services we give in these units by our partners makes us sustainable during the validation mode. Now, for public awareness of this, many cases we're working with very high-level research institutes and hospitals. When we want to, let's say, put out an announcement, we always have to ask their permission. Now, most serious research institutes are not in a hurry to put out PR. Oh, look, we put in a non-pure. We put in a this until. Everything is rolling smoothly and validated. And we have to respect that. So we're really focusing now on validating everything, making sure things are in place. And I think as the hospitals we work with, as the research institutes we work with, we'll feel that we've got everything running and we're already manufacturing, they will feel more comfortable. And of course, as we start rolling out, we are less, I would say, reliant on the hospitals because we can roll out in any location. So remember, this is like our better sites. These are our validation sites. And for me, I think it's really wonderful that even during the validation mode, we are sustainable, which means we can add more sites if needed. But this is our goal. So I think you can deduct from that more or less where we are at the rollout.
spk04: Yeah, I think that is clear. I think I fully agree that validations so that you get more confirmations that this is working solution. This is a working solution. So when you say validations, would you also shed some colors over the next few quarters, how this may surface or how we expect that? And the last question is when you're answering one of the investors' questions on licensing, would you mean that the next, how do we expect for the next few quarters appearing? Yeah, that is my last question.
spk00: Okay, so validation is really something that is kind of regulatory defined, right? The way you do this, you usually take a product and you run it for three validation runs. Typically, this will take three to six months, okay? That's kind of how it works. And that's kind of the typical validation process, okay? I hope that answers your question. It doesn't matter if it's CEU. And why does it take three, six months? Because, you know, that's the time it takes to manufacture most of them. So if you're making three runs, then, you know, okay? So that's kind of for validation timelines and how much that takes. As for in terms of the second question about licensing, look, we have so many requests to give us therapies, okay? Not even for us to pay for them, just to, you know, for people that are struggling. Even, and not only hospitals, by the way, small biotech companies, bigger companies that have these great therapies and have shown, even in many cases, clinical validity, but are really stuck at a point where they can't make these products for more than 5, 10, maybe at most 20 patients, right? Using a typical clean room. And We really try, I mean, we really, when we in-license something, what we try to do, we really have quite a huge network and expertise in this field, right, because we've got all these centers and all these people who are such great experts in this field. So what we typically do, we kind of ask their opinion, of course. So we have a great model for actually assessing, is this product something that is clinically useful? Does it have a good regulatory pathway? Can we be supportive on the automation and the rollout? And these are typically the questions we ask ourselves if we want to add in a product. So we typically license in something that we already know we have a lot of interest from our global platform to utilize. Sometimes it needs some work from our side, as I explained before to Kevin, but We know that in the short term, we can get this out to our partners so they can start pushing it into different clinical ways. Is that? Thank you. Thank you very much.
spk04: Yes, thank you. Thank you very much. Yes, thank you.
spk08: Once again, ladies and gentlemen, if you would like to ask a question, please press star 1 on your telephone keypad at this time. Our next question is from . Please go ahead.
spk03: Hey, Verit. Congratulations on a great quarter. I follow your company for a while and I respect your mission to make gene therapy affordable and accessible for patients. So I have three questions. Through our channel checks, we saw that Ogenesis recruited a head of global R&D operations and VP of global business development. So it seems like Ogenesis has a strong ability to attract talents to the company. Could you share with us the background of these leading industry experts that you have recently recruited, and how will these strategic hires help to push forward or accelerate the therapies and on-field deployment globally? Thank you.
spk00: So, I mean, for our business development, we've come to a stage, really, that, you know, even though it's not like it's not an issue of marketing, okay? For us, it's because as I said, there's such a lack of capacity. And so it's not that we need to go sell ourselves too much because I think we have too much, you know, I wish we could take on more hospitals even today. That's kind of what I wish, but I think we have to kind of finish the validation stage. But for us, it was very important to take Greg, who's our VP of R&D, who's a great guy, And he's very, very experienced, both in blood banking, different cellular products, and he's worked in decentralized approaches before on diagnostic issues, on different blood products. So he understands very deeply the concept of decentralization. Now, when you are offering a decentralized service, I think it's very important that when you build it up, you build it up in a way that is first of all, sustainable, and as you grow, you don't harm, and you keep the same level of quality. And I think Greg is doing a wonderful job in really aligning and making sure everything is kept at the same level and making sure what are the components we need to continuously monitor and ensure so we are, as a business, as we grow and as we expand, we keep the same level of service to each of our partners. So that's on that side. And for R&D, people have tremendous know-how in biotech today, many of them. So with other people we enroll, we have a wonderful team with a lot of know-how in R&D, in biotech, in development of cell and gene therapies. But I think for us it was important because we have different development units in different areas, to have, you know, just a centralized, making sure the information flow between the different R&D units is flowing clearly, because at the end of the day, that's what's important when you have a decentralized approach, that any information, any development you're having at one location can quickly come back and benefit the rest of the locations.
spk03: My next question is related to our joint venture partners. Are there any updates with these joint venture partners in other regions such as in Europe, Korea, Japan? What I'm referring to is in terms of collaborating with more hospitals and research institutions.
spk00: So they're working according to a plan. In each regional plan, we try to take two, three major institutes. And I think we have well-targeted institutes everywhere. So I think in terms of that, everyone is working according to plan. What I do think, you know, and interestingly enough, as this industry, and that goes back to, you know, I think the governments and the healthcare institutes are realizing more and more that there is an issue. So I think what we were seeing is more government support to our JV partners in terms of even easing the way regulatory-wise, even willing to support financially, listening to them. So they're becoming, I would say, more prominent in the region. Not all of them, but certainly some of them and ones that are more advanced, we can see how they are kind of gaining recognition as an important player in where they're working. And of course, their success is our success. So for me, it's great to see how they're growing and expanding their activity, how they're working more closely, how they're working more closely with the regulators, how they're getting more support locally, how they're becoming, I would say, a leading pillar in the cell and gene industry in the region where they are active, each with their own expertise, of course.
spk03: Okay, thanks Barrett. So I just got one last question is regarding the CAR-QS, the chondrosil on our pipeline. So based on the pipeline together with Kyla-Cell, chondrosil is by TerraCell. It's also at the clinical use stage. So could you share with us how is the market demand for this? Which stage are we at right now and are there any plans to push this ahead and commercialize this?
spk00: Yes, yes. So this is, again, a same issue of automation. It's being marketed in one site, and we're working very hard to complete the ampullization of this, and I'm hoping this will be quite soon. And then we'll do, like, a full IND for it.
spk03: Okay, thanks, Merit. That's all I have, all the questions I have. It's a privilege to be your shareholders, and you have my full support ahead. Thank you for all the hard work, and have a great day.
spk00: Thank you. Thank you very much.
spk08: There are no further questions at this time. I'll turn it back to the management for closing remarks.
spk00: Okay. So, first of all, thanks, everyone, for the questions, really for participating. And I know many shareholders call me up even not during the earnings calls, and I'm always happy to chat and talk to them. So thanks for participating in our second quarter 2021 business update conference call. We're very excited about the outlook for the business and appreciate the strong support of our shareholders. Looking ahead, our goal is to continue the validation of our point of care platform and while building the foundations for our market expansion in the various geographic regions. We look forward to providing further updates as we work in close collaboration with our partners to deploy our point-of-care strategy worldwide. Thank you.
spk08: Thank you. Any further remarks? Okay, thank you. This concludes today's conference. We thank you for your participation. You may disconnect your lines at this time and have a great day.
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